Sysmex : Summary of Consolidated Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2020 (PDF：374KB)

Summary of Consolidated Financial Results [ IFRS ]

for the First Six Months of the Fiscal Year Ending March 31, 2020

		November 6, 2019
Listed company name	:	Sysmex Corporation
Code	:	6869
Listed stock exchanges	:	Tokyo Stock Exchange
URL	:	https://www.sysmex.co.jp/en/index.html
Company representative	: Hisashi Ietsugu, Chairman and CEO
Contact	: Tomoo Aramaki, Executive Vice President
		Corporate Business Administration
Phone	:	078(265)-0500
Scheduled date for filing of quarterly report	:	November 13, 2019
Scheduled date for dividend payment	:	December 2, 2019
Preparation of supplementary material for	:	Yes
quarterly earnings
Holding of earnings announcement	:	Yes

(Unit: Millions of Yen)

1. Results for the First Six Months of the Fiscal Year Ending March 31, 2020

(1) Operating results

(% changes as compared with the corresponding period of the previous fiscal year)

		Net Sales					Operating profit	Profit before tax	Profit
	Six months ended	142,990		5.0%			27,803		(2.5)%		25,075		(5.1)%		17,458		(10.0)%
	Sep. 30, 2019
	Six months ended	136,194		3.9%			28,503		1.8%		26,411		(4.1)%		19,389		1.8%
	Sep. 30, 2018
							Profit			Total			Basic earnings	Diluted earnings
							attributable to
								comprehensive
							owners of the			per share (Yen)	per share (Yen)
								income
							parent
	Six months ended Sep. 30, 2019		17,593	(9.7)%		10,241		(50.1)%				84.29					84.20
	Six months ended Sep. 30, 2018		19,473	1.5%		20,512		(18.8)%				93.36					93.19
(2) Financial condition
																Equity attributable	Equity attributable
		Total assets					Total equity	to owners of the	to owners of the
																parent				parent to total assets
	As of Sep. 30, 2019					364,028				268,057					267,459						73.5%
	As of Mar. 31, 2019					346,775				265,182					264,448						76.3%
2. Dividend
				Dividend per share
				First quarter	Second quarter Third quarter			Year-end				Annual
				(Yen)					(Yen)				(Yen)			(Yen)				(Yen)
	Year ended Mar. 31, 2019		￣		34.00					￣		36.00				70.00
	Year ending Mar. 31, 2020		￣		36.00
	Year ending Mar. 31, 2020																	36.00				72.00
	(Forecast)																	￣

Note: Revision of dividends forecast for this period: No

3. Financial Forecast for the Year Ending March 31, 2020

(% changes as compared with the corresponding period of the previous fiscal year)

	Net Sales		Operating profit	Profit before tax	Profit attributable to	Basic earnings
		owners of the parent	per share (Yen)
Year ending	310,000	5.6%	60,000	(2.1)%	55,000	(5.1)%	38,500	(6.6)%	184.44
Mar. 31, 2020

Note: Revision of business forecast for this period: Yes

4. Other Information

1. Changes in significant consolidated subsidiaries (which resulted in changes in scope of consolidation): No
2. Changes in accounting policies and accounting estimates
3. 1. Changes in accounting policies required by IFRS: Yes
   2. Other changes in accounting policies: No
   3. Changes in accounting estimates: No
4. Number of outstanding stock (common stock)
5. 1. Number of outstanding stock at the end of each fiscal period (including treasury stock): 209,193,432 shares as of Sep. 30, 2019; 209,154,432 shares as of Mar. 31, 2019
   2. Number of treasury stock at the end of each fiscal period:

446,444 shares as of Sep. 30, 2019; 446,168 shares as of Mar. 31, 2019

1. Average number of outstanding stock for each period (cumulative): 208,731,410 shares for the three months ended Sep. 30, 2019 208,580,388 shares for the three months ended Sep. 30, 2018

Note: Quarterly summaries of financial results are excluded from quarterly reviews.

• Explanation regarding the appropriate use of financial forecast and other information
• 1. The forecasts and future projections contained herein have been prepared on the basis of rational decisions given the information available as of the date of announcement of this document. These forecasts do not represent a commitment by the Company, and actual performance may differ substantially from forecasts for a variety of reasons. Please refer to "3) Consolidated financial forecast" within "1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.
  2. Supplementary financial materials (in Japanese and English) will be posted on the Sysmex website on Wednesday, November 6, 2019.

Content of Supplementary Materials
1. Qualitative information on quarterly financial results	2
1)	Operating performance analysis	2
2)	Financial conditions analysis	4
3)	Consolidated financial forecast	4
2. Condensed quarterly consolidated financial statements and notes	5
1)	Condensed quarterly consolidated statement of financial position	5
2)	Condensed quarterly consolidated statement of income	7
3)	Condensed quarterly consolidated statement of other comprehensive income	8
4)	Condensed quarterly consolidated statement of changes in equity	9
5)	Condensed quarterly consolidated statement of cash flows	10
6)	Notes to the condensed quarterly consolidated financial statements	11
	1. Notes related to the going concern assumption	11
	2. Changes in accounting policies	11
	3. Segment information	11

－ 1 －

1. Qualitative information on quarterly financial results

1. Operating performance analysis

Future-related information contained in the text below is based on the judgement as of the end of the fiscal period under review.

During the first six months of the fiscal year ending March 31, 2020, the Japanese economy was affected in the manufacturing sector by worsening earnings due to trade friction and other uncertainties in the international situation, and yen appreciation, as well as a downturn in business confidence. However, the employment and income environments continued their modest recovery, and corporate investment remained firm as companies upgraded obsolete equipment and made streamlining and labor-saving investments against the backdrop of a labor shortage. Overseas, the economic outlook was characterized by a growing sense of caution, due to prolonged US-China trade friction, the United Kingdom's exit from the European Union and rising geopolitical tension in the Middle East.

On the healthcare front, in Japan the medical and healthcare field faces growing demand due to an aging society and increasingly diverse health and medical needs. The Japanese government is including the medical and healthcare industry in its growth strategies, which is expected to continue invigorating healthcare-related industries going forward. Looking overseas, the populations of developed countries are aging, while economic growth in emerging markets is causing healthcare demand to increase and prompting higher levels of healthcare quality and service enhancements. These trends are promoting efficient healthcare, with structural changes brought about by artificial intelligence, information and communications technology, and other breaking technologies.

Against this backdrop, Sysmex obtained Japanese manufacturing and marketing approval for the OncoBEAM™1 RAS CRC Kit, an RAS gene2 mutation testing kit. This product is the first in vitro diagnostic reagent in Japan to be used for RAS gene mutation testing for colorectal cancer using liquid biopsy. Minimally invasive and simpler than conventional physical biopsies of tumor tissue, the new testing method provides detection results on a par with the use of tumor tissue. As a result, this testing method reduces the physical and mental burden on patients, expands testing opportunities, and contributes to the early-stage determination of treatment methods.

In addition, Sysmex launched its PS-10 sample preparation system in the North American market in August 2019. This system is for the clinical flow cytometry (FCM) testing market, which uses flow cytometry to perform detailed analyses of leukemia and malignant lymphoma diagnoses. By automating complicated sample preparation work for clinical laboratories, the PS-10 results in providing workflows which are more efficient and aids in standardizing clinical flow cytometry testing. In preparation for a global rollout, we will obtain necessary regulatory approval for flow cytometers as analyzers in various countries around the world.

Since 2013, Sysmex and Tasuku Honjo, a general and distinguished professor at the Kyoto University Institute for Advanced Studies, have been conducting joint R&D on a fully automated measurement method for soluble immune checkpoint molecules (sPD-1,sPD-L1 and sCTLA-4) using the HI-1000, an automated, highly sensitive immunoassay system for research applications. In September 2019, Sysmex began providing assay services for research using this measurement method. The measurement method can be used in cancer immunotherapy and as a new method for diagnosing autoimmune diseases, and has the potential to help realize personalized medicine. Going forward, we will promote R&D with a view toward commercialization, contributing to advances in healthcare.

1. OncoBEAM™:
   The name of Sysmex's technology to detect minute gene mutations circulating in the blood with a high degree of sensitivity using BEAMing technology, which was developed at Johns Hopkins University.
2. RAS gene:
   As the likelihood is high that patients with RAS gene (KRAS/NRAS gene) mutations will not benefit (prolongation of life, tumor reduction) from the administration of anti-EGFR drugs, companion diagnostics may be performed to treat the gene mutation first.

－ 2 －

Net sales by destination

		Six months ended	Six months ended	YoY
		Sep 30, 2018	Sep 30, 2019
		(Previous
		Amount	Percentage of	Amount	Percentage of
		period = 100)
		(Millions of yen)	total (%)	(Millions of yen)	total (%)
Japan	20,937	15.4	22,691	15.9	108.4
	Americas	31,413	23.1	32,788	22.9	104.4
	EMEA	36,004	26.4	37,580	26.3	104.4
	China	36,230	26.6	37,413	26.2	103.3
	Asia Pacific	11,608	8.5	12,516	8.7	107.8
Overseas subtotal	115,257	84.6	120,298	84.1	104.4
Total	136,194	100.0	142,990	100.0	105.0

In Japan, instrument sales increased, mainly in the hematology and life science fields. As a result, sales in Japan rose 8.4% year on year, to ¥22,691 million.

In overseas markets, reagent sales were down, chiefly in the hemostasis field, but reagent sales rose, centered on the hematology, urinalysis and immunochemistry fields. Consequently, overseas sales for the Sysmex Group rose 4.4% year on year, to ¥120,298 million. The overseas sales ratio fell 0.5 percentage point, to 84.1%.

As a result, during the first six months of the fiscal year ending March 31, 2020, the Group recorded consolidated net sales of ¥142,990 million, up 5.0% year on year. Operating profit fell 2.5%, to ¥27,803 million; profit before tax decreased 5.1%, to ¥25,075 million; and profit attributable to owners of the parent fell 9.7%, to ¥17,593 million.

Performance by segment

(1) Japan

In Japan, sales increased 11.3% year on year, to ¥24,800 million, benefiting from such factors as higher instrument sales, principally in the hematology field.

On the profit front, higher sales pushed up gross profit, but segment profit (operating profit) rose 2.1%, to ¥17,907 million, owing to higher SG&A and R&D expenses.

(2) Americas

Instrument sales were down, mainly in the hemostasis field, but sales of reagents and maintenance services grew in the hematology field, pushing up sales 3.5% year on year, to ¥30,264 million.

On the profit front, increased sales boosted gross profit. Nevertheless, segment profit (operating profit) declined 37.6% year on year, to ¥951 million, as a result of rising SG&A expenses.

(3) EMEA

Sales in the EMEA region expanded 3.1% year on year, to ¥38,146 million, helped by higher reagent sales, mainly in the hematology and urinalysis fields.

On the profit front, higher sales and a decrease in SG&A expenses led to higher gross profit and pushed segment profit (operating profit) up 21.7% year on year, to ¥3,812 million.

(4) China

In China, reagent sales decreased, mainly in the hemostasis field, and instrument sales fell in the hematology field. However, instrument sales in the hemostasis field grew, as did reagent sales in the hematology field. As a result, sales increased 3.3% year on year, to ¥37,370 million.

On the profit front, SG&A expenses decreased, but a worsening cost of sales ratio caused gross profit to decline. Consequently, segment profit (operating profit) dropped 25.2%, to ¥4,146 million.

－ 3 －